Question

Brief Exercise 5-16

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At the end of the year, Whispering Winds Resorts Ltd., a company that has a periodic inventory system, had the following account balances on its unadjusted trial balance: Inventory $28,000, Purchases $260,000, Purchase Discounts $3,500, Freight In $6,500. The inventory count at the end of the year determined that the inventory on hand at that time cost $23,500.

Record the adjusting journal entry that would be made at the end of the year to update the Inventory and Cost of Goods Sold accounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

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Answer 1

Adjusting journal entry is as follows

Inventory (Ending Inventory)		Dr	$   23,500.00
Purchase Discount		Dr	$     3,500.00
Cost of good sold ( Balancing figures)		Dr	$ 267,500.00
	To Purchases	Cr		$ 260,000.00
	To Freight In	Cr		$     6,500.00
	To Inventory (Beginning Inventory	Cr		$   28,000.00
Being Cost of good sold entry recorded in books